The state legislature, the Attorney General and the Governor have now made it official: effective July 1st, they mandate that all nonprofits be revitalized!

But being revitalized means having “more vitality and vigor” – it means the promise of a new, positive life. What? Your nonprofit’s leadership has not yet gotten the revitalization vibe yet?

How can that be?

Doesn’t having to comply with a barrage of confusing regulations written by lawyers for lawyers give you more energy to do more for your mission? Doesn’t the fact that Attorney General Schneiderman lobbied hard to make sure you didn’t have reasonable time to be properly informed of and in compliance with the new law make you feel invigorated?

And just when you thought it couldn’t get any better for nonprofits, State Comptroller DiNapoli just released his Prompt Contracting Annual Reportand, lo and behold, it conclusively shows that under the watch of the NYS Grants Gateway system (which was, remember, designed to “make things better” for us) contracts and payments are taking longer than ever.

Did you know that New York is the only state in the country with a prompt payment law and yet we are among the top ten worst in the nation in this area? Unbelievably, contracts with nonprofits were late a whopping 87% of the time in 2013 compared to 2012, when it was an already outrageous 78%.

Take a look at the list of contracts and judge for yourself. One contract was over 1,200 days late. And let’s not let the AG off the hook on this, as his office is a major factor in the late processing and approval of contracts at their inception.

Under the Patterson administration, at least the State was upfront in that it simply they did not have the cash in the treasury to pay us. The State is now flush with cash, the Governor created a nonprofit liaison position to improve matters but the result is that problem has gotten worse. The State is now flush with cash, so the justification for the regularly inflicted financial pain has shifted to a “tough love” approach.

The Grants Gateway, which was developed within the bowels of state government with very little nonprofit involvement and no involvement of the AG and the Comptroller, was sold as making the existing grants process more efficient, saving nonprofits and the taxpayer precious time, effort and resources, and the solution to the prompt contract and payment problem. Instead it became a system resembling old English welfare law where we have to jump through new and ever changing bureaucratic hoops to show that we have sufficient character, integrity and capacity to be considered “accountable and worthy” enough to have the privilege of losing money on state contracts. We are told to grin and bear it because in a few years, the process will have the kinks worked out; all will be fine. This of course will not happen unless all state contracts are administered under a single roof like in NYC and the Executive Branch, the AG and the Comptroller work out a cooperative model.

And then, there is the Governor’s Executive Order capping overhead expenses to 15%. This cap is mandated irrespective of what indirect expenses are actually are and the fact that the ever-increasing state contract requirements are driving those expenses up all the time. Add to this that many, if not most state contracts pay below 15%. We are expected to rely on charitable dollars to subsidize the cost of doing business with the State.

If we were the for-profit sector, there would be legitimate and open debate about the harmful consequences, intended and/or unintended, of regulations and state policies on the financial health of businesses, jobs and communities. If this were the case, for-profit businesses would be up-in-arms, using their money and influence to make sure state policymakers listened. And, they would.

We don’t get that level of respect, unfortunately. Is it because most policymakers and regulators don’t understand or care to understand the true effect of over-regulation and dysfunctional state business practices on our mission services and our financial viability? Is it this because there is a paternal “third sector” attitude toward us that just so happens serves to feed with taxpayer and charitable dollars the growth of the legal, regulatory and compliance industry? Is it because so many of us, including umbrella groups, have been effectively coopted? Or, is it because cannot engage in the “pay-for-play” games of Albany? Check all of the above.

The notion that these “tough love” measures will “revitalize” the nonprofit community is false and dangerous rhetoric. It is built on negativity, the very limited and biased view of regulators, and an obsession with the relatively few “bad apples” that exist. Thus,the exception becomes the rule and the rule itself, becomes our costly, new problem. Yes, we need to focus our immediate efforts inward to comply with what we must, whether it makes sense to us or not. But, let’s not fall into the trap that compliance displaces mission and we become risk averse. We must not let that attitude define who we are and what we are committed to do for our constituencies. There is a much greater need for us to look outward and educate our elected leaders, stakeholders and the public not just about our good work, but how we do business and the impact of state policies on our operations.On a daily basis, I am absolutely astounded and amazed about the positive nature, character and dedication that nonprofits boards, leaders and line staff demonstrate every day despite the seemingly endless obstacles and challenges that state government puts in our way. I believe we have the momentum to turn what may be our current Revitalization Blues into an opportunity for real reform that responds to our true needs rather than those of special interests. I don’t think we’ll be singing, “Happy Days Are Here Again” anytime soon, but we can change the current tone if we continue to raise our voices together.

As always, thanks for reading & thank you for everything you do.

Doug

Doug Sauer, CEONew York Council of Nonprofits, Inc.

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